Recap | 15 February 2026

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US and Europe emphasize 'shared interests' at Munich Security Conference
US builds forces in Middle East ahead of mediation with Iran in Geneva
Ukraine looks for security guarantees at US-brokered talks with Russia

US inflation cools in January though price pressures remain
White House reportedly weighs adjustments to metals' tariffs
Europe eyes capital markets integration and global role for euro

Administration eases sanctions on oil operations in Venezuela
US reaches agreement on Taiwan trade, pauses restrictions on China
Board of Peace set to meet with initial commitments for Gaza's redevelopment

Congress no closer to agreement on DHS funding amid redistricting push
UN, courts seek to define AI's impact and software's legal protections
AI demand fuels memory chip shortages across industries

The next Recap will be published for Wednesday, February 18th.

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Headlines

US and Europe emphasize 'shared interests' at Munich Security Conference

At the annual Munich Security Conference this weekend, US and European officials coupled softer rhetoric with a sobering recognition that a frayed alliance would be held together by mutual strategic concerns. Secretary of State Rubio attempted to strike a diplomatic tone as he conveyed the primacy of US national interests in the Western Hemisphere. The American delegation avoided mention of Russia or Greenland.

German Chancellor Merz and French President Macron offered an impetus for bolstering European security collaboration amidst a trans-Atlantic reset. UK Prime Minister Starmer espoused the virtues of closer UK-EU ties. European Commission President von der Leyen stressed the importance of "digital sovereignty".

Comment:

While the US and Europe will remain partners in intelligence and nuclear deterrence, the deemphasis of NATO has left Europe to plan for its own continental defense. Europe is also wary of US technological hegemony.

Sources:

Europe hopes to repair trans-Atlantic trust as Rubio attends key security conference (AP; 2/13)
Rubio's speech to European allies takes a softer tone but sticks to Trump's firm stance (AP; 2/14)
Merz, Macron eye new European security framework amid US reset (Reuters; 2/13)
Rubio strikes constructive tone but persists in US criticism of European allies (Reuters; 2/14)
Europe aims to rely less on US defence after Trump's Greenland push (Reuters)
Clash of Cultures With Trump World Sees Europe Gang Together (Bloomberg; 2/13)
Europe Talks Nuclear Weapons After US Delivers Reality Check (Bloomberg; 2/13)
Exclusive: Rubio Warns European Leaders About Danger of Western Decline (Bloomberg; 2/14)
Germany's Merz Calls of ran Overhaul of the U.S.-Europe Alliance (WSJ; 2/13)
Rubio Seeks to Reassure European Allies in Munich Speech (WSJ; 2/14)
U.S. and Europe, No Longer Kindred Souls, Enter a Marriage of Convenience (WSJ)

US builds forces in Middle East ahead of mediation with Iran in Geneva

Ordering another aircraft carrier and accompanying forces to the Middle East, President Trump directly linked potential military intervention with a failure to reach a satisfactory accord with Iran; the timeline was unclear. The countries are at odds over nuclear enrichment, while issues regarding ballistic missile capabilities and support for military proxies remain unresolved.

Reuters reported that the US is preparing for the possibility of a more involved conflict than that of Maduro's extradition in Venezuela or last year's 12-day war between Israel and Iran.

US and Iranian delegations will meet in Geneva on Tuesday for discussions that Oman will mediate. Iran will float the prospect of opportunities for economic cooperation and investment according to a foreign ministry official. Iran's foreign minister will also meet with the IAEA's chief nuclear inspector on the trip.

Sources:

Trump says change in power in Iran 'would be the best thing that could happen' (AP; 2/13)
US, Iran to hold new round of nuclear talks in Geneva this week, Swiss government says (AP; 2/14)
Iran's top diplomat to attend 'indirect' talks with US in Geneva, state-run IRNA news agency says (AP)
Trump says Iran regime change could be 'best thing' as second carrier heads to Middle East (Reuters; 2/13)
Exclusive: US military preparing for potentially weeks-long Iran operations (Reuters; 2/13)
Iran says potential energy, mining and aircraft deals on table in talks with US (Reuters)

Ukraine looks for security guarantees at US-brokered talks with Russia

The US will broker another round of negotiations between Ukraine and Russia in Geneva on Tuesday and Wednesday in an effort to pin down an elusive ceasefire. Ukraine has continued to stress the importance of bona fide security guarantees before agreeing to any other terms. The fortified territory in Donetsk not yet controlled by Russia remains at the center of the negotiating impasse.

In the meantime, Russia has continued to attack Ukraine's power grid as the latter targets Russia's oil infrastructure - and its war revenue.

Sources:

A new round of US-brokered talks between Russia and Ukraine is set for Geneva next week (AP; 2/13)
Zelenskyy says questions remain for allies over security guarantees for Ukraine (AP; 2/14)
Ukrainian drone strike sparks fires at Russian Black Sea port ahead of US-brokered peace talks (AP)
Russia Black Sea Port Hit in Drone Strike Before Peace Talks (Bloomberg)

Markets & Economies

US inflation cools in January though price pressures remain

In January, core inflation fell to its lowest annual rate (2.5%) since 2021, albeit with small distortions to imputed components on account of lapsed data collection during the government shutdown. Falling energy prices contributed to a softer-than-expected headline rate (2.4%). Tariff effects on goods prices were less broad than feared, but services price growth firmed.

Comment:

One report is not enough to satisfy Fed officials' concerns about above-target inflation. A string of them might be, but not before likely holds in March and April. Tariff effects will take time to pass through to consumer prices and constrained technology supply chains have introduced new risks. The Fed's preferred gauge of inflation, PCE, will be released later this week along with GDP data.

Sources:

Inflation measure falls to nearly five-year low as gas prices fall and housing costs cool (AP; 2/13)
US consumer prices increase marginally, but inflation pressures persist (Reuters; 2/13)
US Inflation Comes in Relatively Tame, Defying Fears of Jump (Bloomberg; 2/13)
Inflation Slowed to 2.4% in January, Helped by Lower Gasoline Prices (WSJ; 2/13)

See Also:

Treasury Yields Fall as CPI Keeps Fed Wagers Alive: Markets Wrap (Bloomberg; 2/13)
Fed's Goolsbee Says More Cuts Hinge on Inflation Heading to 2% (Bloomberg; 2/13)

White House reportedly weighs adjustments to metals' tariffs

The administration refuted reports from the Financial Times that the US was actively considering changes to its 50% aluminum and steel tariffs issued under Section 232 under the auspices of national security. Nevertheless, several media outlets reported that changes were under consideration, including the possibility of tiering (WSJ) and clarifying the treatment of derivative products (i.e., those that use aluminum and steel as inputs).

Sources:

White House: no changes to Trump metals tariffs unless president announces them (Reuters; 2/13)
Trump Trade Team Working to Narrow Scope of Metals' Tariffs (Bloomberg; 2/13)
Trump's Team Considers Overhaul to Steel and Aluminum Tariffs (WSJ; 2/13)

Europe eyes capital markets integration and global role for euro

European leaders gathered informally in Brussels on Thursday to discuss financial and economic integration. This would include laying the foundation for a single market, reduced intra-bloc barriers, and establishing a Capital Markets Union for joint issuance and euro-denominated trading. The formal plans will be presented in March.

This weekend, the ECB announced that it would make its repurchase facility available to eligible central banks on a standing basis in order to improve euro availability and facilitate its role as a reserve currency.

Comment:

In a repurchase transaction, a security is sold with an agreement that it will be bought back or repurchased at a later date for a specified price. The difference between the initial sale price and the repurchase price encapsulates a rate of interest. In essence, this is the cost of borrowing money for a (short) period of time while pledging collateral against what amounts to a loan.

By making their repurchases facility more available to other central banks, the ECB is making it easier to acquire euros in exchange for high-quality collateral such as government bonds. This would allow a foreign central bank to acquire euros for a short-period without needing to liquidate its euro-denominated holdings - potentially at a loss.

Secured (i.e., backed by collateral) "repo" rates for government debt are closely tied to central bank policy rates. Short-term repo and related "money-market" instruments are the principle mechanism through which administered policy rates begin to work their way through the broader financial system. Overnight general collateral (GC) repo rates for Treasuries tend to be fairly close to the effective Federal Funds rate. When the Fed raises or lowers the fed funds rate, repo and other short-term interest rates tend to follow suit, which in turn influences interest rates throughout the economy.

Sources:

EU leaders vow to accelerate single market, in struggle to compete with US and China (Reuters; 2/12)
EU weighs two-track approach to break economic reform deadlock (Reuters; 2/13)
ECB makes euro backstop global to bolster currency's role (Reuters; 2/14)

Around the World

Administration eases sanctions on oil operations in Venezuela

The Treasury's Office of Foreign Asset Control (OFAC) issued general licenses allowing a small group of oil companies to operate more freely in Venezuela. New investments in conjunction with Venezuela's state-owned PDVSA are also permissible - subject to OFAC approval. Payments and royalties will be administered through a US-controlled account.

Sources:

US eases sanctions to give oil majors broad scope to operate in Venezuela (Reuters; 2/13)
US Lets Some Oil Companies Produce Oil, Gas in Venezuela (Bloomberg; 2/13)
Trump Greenlights More Oil-and-Gas Investments in Venezuela (WSJ; 2/13)

US reaches agreement on Taiwan trade, pauses restrictions on China

The US reached an agreement with Taiwan last week in which the island's tariff rate will be reduced to 15% and its chip exports will be spared from the full impact of Section 232 tariffs on semiconductors. Taiwan agreed to invest in US domestic fabrication and provide sizable credit guarantees.

At the same time, the administration has temporarily eased technology restrictions on China. Foreign Minister Wang Yi also met briefly with Secretary Rubio in Munich.

Comment:

The White House is seeking to maintain ties with Taiwan given its strategic importance vis-a-vis semiconductors while avoiding another trade row with China. National security implications notwithstanding, easing restrictions on technology transfers appears to be a gesture of goodwill ahead of a planned Trump-Xi meeting in Beijing in April.

Sources:

Trump administration reaches a trade deal to lower Taiwan's tariff barriers (AP; 2/13)
Exclusive: Trump pauses China tech bans ahead of Xi summit (Reuters; 2/12)
China's Wang Yi Meets US' Rubio Ahead of Planned Trump-Xi Summit (Bloomberg; 2/13)

Board of Peace set to meet with initial commitments for Gaza's redevelopment

President Trump will host the inaugural Board of Peace meeting on Thursday in Washington as its Chairman. The UN-sanctioned body is charged with the stabilization and restoration of Gaza, although its stated remit has expanded to broader conflict resolution.

Sources:

Trump says Board of Peace will unveil $5 billion in Gaza reconstruction pledges at inaugural meeting (AP)
Board of Peace members have pledged more than $5 billion for Gaza, Trump says (Reuters)

Odds & Ends

Congress no closer to agreement on DHS funding amid redistricting push

Lawmakers in Congress were unable to resolve a dispute over ICE conditions, leading to a lapse of DHS funding and partial government shutdown.

The partisan standoff has been intensified by the looming midterm elections, for which redistricting efforts have continued in earnest.

Sources:

No clear path to ending the partial government shutdown as lawmakers dig in over DHS oversight (AP)
Virginia redistricting election will go forward while court considers appeal (AP; 2/13)
Virginia high court clears way for congressional redistricting vote, boosting Democrats (Reuters; 2/13)
How the US Supreme Court set the stage for partisan gerrymandering arms race (Reuters; 2/14)
White House Orders Homeland Security Shutdown as Funding Lapses (Bloomberg; 2/13)
How a Homeland Security Shutdown Affects ICE and TSA (WSJ; 2/13)

UN, courts seek to define AI's impact and software's legal protections

The UN approved an expert panel to evaluate the economic and social impact of artificial intelligence as well as risks emerging from its adoption.

While the international community seeks to define the challenges presented by AI, a US appeals court quietly determined that purely functional software - as opposed to expressive - is not protected speech under the First Amendment.

Comment:

These panels and rulings may go under-the-radar, but they can become the basis for customs, norms, and laws with much broader and lasting effect.

Sources:

UN approves 40-member scientific panel on the impact of artificial intelligence over US objections (AP; 2/12)
Not all computer code protected as speech, US appeals court finds in ghostgun case (Reuters; 2/12)

AI demand fuels memory chip shortages across industries

Bloomberg has highlighted the considerable risks to profit outlooks, planned capital expenditures, and general prices stemming from acute memory shortages driven by insatiable AI processing demands.

Source:

Rampant AI Demand for Memory Is Fueling a Growing Chip Crisis (Bloomberg)

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Sources were published/accessed on the date of the Recap unless otherwise noted. Article headlines are subject to change and may not correspond to those given here.

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